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Allegheny's (ATI) Earnings and Sales Beat Estimates in Q2

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Allegheny Technologies Inc. ATI slipped to a net loss of $422.6 million or $3.34 per share in second-quarter 2020 from net income of $75.1 million or 54 cents per share in the prior-year quarter.

Excluding one-time items, adjusted loss per share were 2 cents, which was narrower than the Zacks Consensus Estimate of a loss of 10 cents.

The company delivered revenues of $770.3 million in the quarter, down 28.7% year over year. Nevertheless, the figure surpassed the Zacks Consensus Estimate of $666.8 million.

Allegheny Technologies Incorporated Price, Consensus and EPS Surprise

Allegheny Technologies Incorporated Price, Consensus and EPS Surprise
Allegheny Technologies Incorporated Price, Consensus and EPS Surprise

Allegheny Technologies Incorporated price-consensus-eps-surprise-chart | Allegheny Technologies Incorporated Quote

Segment Highlights

In the second quarter, revenues in the High-Performance Materials & Components (“HPMC”) segment declined 43.6% year over year to $300.7 million. The company noted that 84% of unit sales were attributable to the aerospace and defense markets. Sales of next-generation jet engine products contributed 41% to total HPMC jet engine product sales. Operating profit in the unit plunged 88.3% year over year to $9.2 million. Reduced asset utilization rates and lower overall demand affected operating margins.

The Advanced Alloys & Solutions (“AA&S”) segment’s sales fell 14.2% year over year to $469.6 million. Total sales to all energy markets declined 20% year over year. Operating profit in the division totaled $18.1 million, down 49.9% year over year.

Financial Position

Allegheny ended the second quarter with cash and cash equivalents of $539.1 million, up 91.7% year over year. Long-term debt fell 1.3% year over year at $1,516.9 million.

Cash provided by operating activities for the second quarter was $101 million.

Outlook

Allegheny expects the current challenging and uncertain economic conditions stemming from the coronavirus pandemic to continue throughout the remainder of 2020, at least. The company is undertaking major steps to mitigate the negative impacts on its financial results. It remains focused on ensuring a strong balance sheet along with preserving free cash flows.

Price Performance

Shares of Allegheny have lost 53.7% in the past year compared with the industry’s 52.9% decline.

Zacks Rank & Key Picks

Allegheny currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Gold Fields Limited GFI and Northern Dynasty Minerals Ltd. NAK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Equinox Gold has an expected earnings growth rate of 255.2% for 2020. The company’s shares have surged 103% in the past year.

Gold Fields has an expected earnings growth rate of 35.7% for 2020. Its shares have returned 121.1% in the past year.

Northern Dynasty has an expected earnings growth rate of 35.7% for 2020. The company’s shares have gained 88.2% in the past year.

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Allegheny Technologies Incorporated (ATI) : Free Stock Analysis Report
 
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